New Dynamics in Cross-Taiwan Strait Relations

How Far Can the Rapprochement Go?

Weixing Hu, Weixing Hu

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781135082192
• Edition: 1
• Topic: Scienze sociali
• Subtopic: Studi sull'etnia

Relations between mainland China and Taiwan have improved markedly in recent years, giving rise to the key question, How far can the current rapprochement go? This book focuses on how mainland China-Taiwan relations are likely to develop in future. It considers economic relations, including the many recent trade agreements, the political sphere, where there has been little progress, the impact of increasing personal, social contacts, and the role of international actors, especially the United States. The book concludes by arguing that the present "circulatory dialogue" is likely to continue, without a transformative breakthrough.

Part I

Does the Economic Cooperation Framework Agreement have spillover effects in political relations?

1 On the spillover effect of the Economic Cooperation Framework Agreement

Perspectives from the European model of functional integration

David W.F. Huang

Introduction

Since May 20, 2008, as many as 16 agreements and three memorandums have been signed between China and Taiwan. Most of them aim at normalizing economic and trade relations across the Taiwan Strait. The trend of cross-Strait rapprochement continued until June 29, 2010, when the Economic Cooperation Framework Agreement (ECFA) was signed by the Straits Exchange Foundation (SEF) of Taiwan and the Association for Relations across the Taiwan Strait (ARATS) of China. The ECFA was widely hailed as a landmark achievement for both Beijing and Taipei, because it signaled to the world that both sides were ready to bury the hatchet and seek peaceful resolutions for their political disputes (BBC News, 2010). Moreover, since the nature of the ECFA is similar to that of a free trade agreement, the signing of the ECFA has generated various speculations that Taiwan and China would engage in serious economic integration, which may initially include Taiwan in the one-China market and eventually lead to a political union (or unification) between China and Taiwan. Paradoxically, the above view is held by strategic planners of the Chinese Communist Party (CCP) and by independence-aspired politicians of the Democratic Progressive Party (DPP) in Taiwan (The Economist, 2010).

While not disputing the possibility that the ECFA may facilitate further cross-Strait economic integration, others contend that the signing of the ECFA is driven by economic globalization, which compels economies with complementary factors to cooperate in order to gain competitive edges in the global market. From this perspective, cross-Strait economic integration, like it or not, is an inevitable trend, which does not necessarily lead to a political unification between China and Taiwan. This view is promoted by the Chinese Nationalist Party in Taiwan, or Kuomintang (KMT), under Ma Ying-jeou's presidency, as well as by some policy analysts of US think tanks (Paal, 2010; Romberg, 2010a, 2010b). Ma's government argues that ever closer economic integration between China and Taiwan would strengthen Taiwan's economy and autonomy, hence entrenching the existing political status quo of the Taiwan Strait (MAC, 2010a). Moreover, it is hoped by Ma's government in Taiwan that the signing of the ECFA will mitigate China's opposition to Taiwan's negotiation of free trade agreements (FTAs) with its trade partners (Lai, 2010).

The validity of the above two contrasting views is hinged on the alleged effect of functional spillover. That is, whether the spillover effect of economic integration works for political unification between China and Taiwan. This same question was posed by Hass and Schmitter more than 45 years ago in the context of European integration — that is, “whether economic integration of a group of nations automatically triggers political unity” (Hass and Schmitter, 1964: 705). In this chapter I attempt to perform a reality check of the ECFA against yardsticks set out by the European model of functional integration. The core question is whether the spillover effect of the ECFA does exist, and if so, how far the spillover effect can go. What follows next is an outline of key conditions and mechanisms of functional integration derived from European experience. Then I concentrate my discussion on some of the conditions and mechanisms of functional spillovers. Finally, I suggest what should be done to improve functional spillover, if it is seen as desirable for maintaining peace and st ability in the Taiwan Strait.

The European model of functional integration and its mechanisms for spillover

No place other than Europe provides ample experiences of functional integration among nations. These experiences were vividly promoted by the passionate words of Jean Monnet:

In 1950 what many people today would regard as a modest beginning but which seemed very bold at the time; and the parliaments of France, Germany, Italy, and Benelux voted that, for coal and steel, their countries would form a single market, run by common institutions administering common rules, very much as within a single nation. The European Coal and Steel Community (ECSC) was set up. In itself this was a technical step, but its new procedures, under common institutions, created a silent revolution in men's mind…. The new method of action developed in Europe replaces the efforts at domination of nation states by a constant process of collective adaptation to new conditions, a chain reaction, a ferment where one change induces another.

(Monnet, 1962: 205–208)

Indeed, if one examines the history of the European Union (EU) for the past 60 years, one would find that it began with the modest project of the ECSC, a functional organization in its intent. Then it ventured into a custom union, common market, economic and monetary union, and would hopefully lead to political union (Balassa, 1961). This simple reading of European integration enlists great confidence in the effectiveness of functional spillover, as if one functional area integrated would mechanically trigger integration of another (Mitrany, 1966). The process of functional linkage of tasks continues until all aspects of economic activities are integrated. Moreover, the force of functional spillover can be so strong that even policy areas reserved for sensitive “high politics” would be intensively coordinated (if not fully integrated), as demonstrated by the EU's common foreign and security policy (CFSP).

However, the above mechanical view of functional linkage misconceives the way spillover actually takes place. Dissatisfied with functionalism, Ernst Haas argues that “Lessons about integrative process associated with one phrase do not generally carry over into the next because the specific policy context… determines what is desired by government and tolerated by them in terms of integrative accommodation” (Haas, 1958: 376). To be specif, as Lindberg formulates, “the dynamics of spillover are dependent upon the fact that support for any given step in integration is the result of convergence of goals and expectations” (Lindberg, 1963: 153). When there is perceived imbalances created by economic interdependence, political actors may redefine their common goals and interests, hence converting their expectations toward integrative solutions. For example, once the single market program was competed in 1992, it became apparent that the cost of currency exchanges could undermine free movements of economic factors, hence making it functionally necessary for member states to promote economic and monetary union. On the other hand, where there are divergences of goals and expectations among political actors, integrative process can be stopped, or sometimes reversed. These phenomena are known as “spill-around” or “spill-back” (Lindberg and Scheingold, 1971). For example, the 1958 coal crisis in the ECSC had resulted in national solutions of its member states (Nye, 1971).

In other words, the spillover effect is far from guaranteed, even if tasks are functionally linked. Neo-functionalism places political actors in the central role of functional spillover, but it does not spell out clearly under what conditions political actors would allow functional spillover. Joseph Nye was among the first theorists to revise the neo-functionalist model. Figure 1.1 demonstrates one cycle of Nye's revised neo-functionalist process model, in which integrative potentials and process mechanisms that facilitate functional spillover are identified. At the outset there are structural and perceptual conditions that underlie integrative potentials. The structural conditions include symmetry of units, capacity of member states to adapt and respond, pluralism, and value complementarity among elites. The perceptual conditions include perceived equity of distribution of benefits, perceived external cogency, and low (or exportable) visible costs (Nye, 1971: 217). While structural conditions tend to remain constant during the course of integration, perceptual conditions are highly affected by the process itself. There are a number of member units which either prefer more liberalization or administration (regulation) at the regional level. Their preferences will be channeled through seven process mechanisms that facilitate functional spillover.

The first mechanism, functional linkage of tasks, has been discussed above. We should not repeat it. The second mechanism is an increase in transactions.

Figure 1.1 Nye's revised neo-functionalist process model (source: Nye, 1971).

Note

Arrows indicate a strong relationship; broken arrows a weak relationship; shaded areas of circles indicate groups opposed; open areas of circles indicate groups in favor.

Transactions are contacts or dealings, which may take the forms of trade, communication, labor or capital movements, etc. Rising transactions need not lead to a significant widening of functional tasks, but they could empower common institutions, which may indirectly demand linkages of functional tasks. Moreover, an increase in transactions alters the existing political and economic incentives and opportunity structures, which may persuade leaders and elites to redefine their common goals and interests, hence leading to functional spillover (Nye, 1971). The third mechanism is deliberate linkage and coalition formation, which is commonly referred as “cultivated spillover.” In this case, problems are deliberately linked into a package not because of their technical necessity but because of their political expedience and ideological appeal. For example, the 1987 Single European Act (SEA) was a result of grand bargaining which simultaneously satisfied the British demand for de-regulations of internal market and re-calculation of its budget contribution to the EC, and Franco-German insistence on preservation of the social model and common agriculture policy (CAP) (Moravcsik, 1998: 373–374).

The fourth mechanism is elite socialization. The creation of regional institutions offers ample opportunities for politicians and bureaucrats who deal with regional affairs to internalize common values and develop a possible feeling of collective identity. Indeed, one study shows that policy preferences of national bureaucrats dealing with European affairs are more similar to those of Eurocrats than those of bureaucrats in other national departments (Thomson, 2008). In the long run, these regional-oriented elites may facilitate functional spillover, as they are used to dealing with problems through integrative solutions. The fifth mechanism is regional group formation. An increase in regional transactions followed by the establishment of regional problem-solving institutions may stimulate interest-group formations at the regional level. In Europe, as a result of the formation of the EC and EU, the number of pan-European interest groups registered in Brussels increased from 174 in 1960 to 1,998 in 1995 (Wessels, 1997: 276). The sixth mechanism is ideological-identitive appeal. Once established, the continuing existence and operation of a regional organization may reinforce its own ideological-identitive appeal, which in turns provides political legitimacy for its demand of functional spillover.

The final mechanism is the involvement of external actors in the integration process. External actors may be adversely affected by the existing integration process, hence wishing to influence directions of functional spillover. For example, in the 1990s 15 central and eastern European countries sought to join the EU in order to internalize negative externalities of the impact of the single European market. This, in turn, imposed pressures on existing member states to reform EU institutions in the 1997 Amsterdam and 2000 Nice inter-governmental conference (Dinan, 1999: 184–199). Sometimes an external actor can serve as a facilitator of functional integration, as exemplified by the role of the United States in the establishment of the EC. When an external actor is involved too much in the integration process it may become a de facto veto player for further functional spillover. Together, these seven process mechanisms produce four dynamic outcomes — politicization, redistribution, externalization, and reduction of alternatives. These four outcomes will, in turn, alter integration potentials.

Assessing the spillover effects of the ECFA

Having specified integrative potentials and process mechanisms of functional spillover derived from Nye's neo-functional process model, I now concentrate my discussion on some conditions and mechanisms in the context of the ECFA and cross-Strait economic integration. First, due to size asymmetry between China and Taiwan, Taiwanese politicians are very cautious about engaging in the process of economic integration. They fear that economic integration could lock Taiwan's economy into the one-China market and hence lose economic autonomy. Former president Lee Teng-hui's “be patient and hasting slow” policy and Chen Shui-bian's “active opening-up and effective management” policy are two vivid examples of how Taiwanese politicians cautiously approach economic integration with China. This structural condition of integrative potential, namely size asymmetry, constrains the pace and the content ...